How South32 Ltd has thumped the returns of BHP Billion Limited

Credit: Grange Resources presentation

If you look back over the last couple of years, emerging diversified metals and mining company South32 Ltd (ASX: S32) has taken the bubble and squeak of former father BHP Billion Limited (ASX: BHP) and made soufflé out of it. 

South32 kicked off independent trading on the ASX in mid-2015 after a demerger from commodities giant BHP, which saw an in-specie distribution of South32 shares to BHP shareholders. 

Rumour had it South32’s portfolio was cast off from BHP as it wasn’t widely supported, with assets in alumina, aluminium, coal, manganese, nickel and zinc to name a few. 

At the time BHP said shedding South32 would unlock shareholder value by simplifying its core operations with focus on the larger portfolios. 

But South32 has made the best of the offcuts, with its share price rising an impressive 80% since its closing price of $2.05 on its first day of trade in May 18 2015. 

South32 opened on February 8 down slightly to $3.70, but is still 24% above its 200-day moving average. 

As a comparison, BHP closed at $30.13 on May 18, 2015, opening today down 1.4% at $29.43. 

There are other factors to consider in this comparison, but there is little doubt that South32 has flourished in its short time trading and looks set to continue to do so on its current route. 

In company news South32 has recently named its main priorities as base metals, with a plan to spin off its South African Energy Coal assets within the next 6 months. 

The South32 quarterly report issued in mid-January indicated FY18 guidance had been maintained for all operations, with an 8% increase in manganese thanks to strong market demand. 

The company paid out $333 million in shareholder dividends during the December 2017 half year and bought back 37 million shares for a cash consideration of US$93 million. 

Analysts like most things about South32 at the moment, with commodity prices high in the resources sector as a whole. 

But analyst forecasts are for South32’s share price to continue its upwards ascent for the time being, with a projected share valuation of $4.04 and half-year results handed down on February 15 expected to be reasonably positive. 

The Disruptors: 3 Revolutionary Aussie Companies to Back for 2018

We’re living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.

That’s why at The Motley Fool we’ve been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Cochlear or REA Group.

We’ve found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!

Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!